Malaysian budget carrier AirAsia has got the green signal from foreign investment promotion board (FIPB) for its proposed domestic budget airlines in India. This clears the first procedural hurdle for the firm and may make it the first foreign airline to operate a domestic carrier after the government liberalised aviation sector last September.
The proposal for the joint venture was heard in a scheduled meeting of FIPB, the nodal body monitoring foreign investment proposal in India, on Wednesday. As per separate reports by news channels quoting sources, the proposal was approved.
FIPB is yet to make an official announcement.
UPDATE: A formal announcement related to the green signal was made on March 26.
Earlier in the day, Aviation Minister Ajit Singh said AirAsia may face some procedural hurdles, though he didn’t feel it would be significant.
The green signal from FIPB comes within a day of the Malaysian firm selecting its chief executivem who would head its tri-party joint venture in India to run the domestic airlines.
“I have selected our CEO for Airasia India. Very smart boy from the south, Madras. An amazing CV. Will impress all,” tweeted AirAsia chief Tony Fernandes on Tuesday. Madras is now renamed as Chennai.
He went on to laud the candidates shortlisted by Tata Group and added that the final call is with Tata Sons as part of the JV agreement. Fernandes added that he hoped Tatas agree to his chosen one.
Two weeks ago, Tata Group, which had launched Air India before its nationalisation, said it is making a comeback to the domestic aviation sector by forming a joint venture with Tony Fernandes-led AirAsia Bhd, Asia’s biggest budget carrier, and private investor Arun Bhatia of Telestra Tradeplace Pvt. Ltd. Bhatia’s son is married to the daughter of steel magnate Lakshmi Mittal.
The move comes after the Indian government eased Foreign Direct Investment in airlines in September last year, allowing foreign airlines to pick up to 49 per cent stake.
(Edited by Prem Udayabhanu)